ESG: The Cost of Ethics | 2020-05-18 | Investing News

People always have one thing on their mind when it comes to investing and that’s making money, but how that money is made can be just as important.

For some, its investing in a passion project, for others, a shared ideal. GoldFinX (P.GLDFNX) wants to support and improve conditions for artisanal gold mining with its crypto GiX coin. This presents an interesting alterative to other gold operators out there.

Exchange Traded Funds (ETFs) are also popular among traders. Funds such as Vanguard Investments Canada Inc. / US Total Market Index (TSX.VCN / TSX.VUN) and iShares Premium Money Market / Emerging Markets ETFs (TSX.XEF, T.XEC) offer a broad swath of opportunity, but finding something similar that highlights alternatives while maintaining diversity can be challenging when the oil an gas sector still so prevalent in our economy, as is resource mining.

Even so, there are some comparable choices out there that come pretty close. A segment of the ETF marketplace found under the designation “ESG” is designed to provide exposure to the performance of an index that is oriented toward positive environmental, social and governance characteristics. A crux to be aware of is that the fees therein can be rather high, while volumes can tend to be lower than what many investors are used to. Here is a list of five such ETFs:

iShares ESG Aware MSCI Canada Index ETF (TSX.XESG): Has some oil and gas stocks, such as SUN, DRMC and ESGE, but with fewer holdings, has lower volume.

Desjardins RI USA – Low CO2 Index ETF (TSX.DRMU): An investor can use this ETF as a sustainable building block for the core of their portfolio at a low cost, while also seizing some benefit from oil and gas stocks.

iShares MSCI EM ESG Select ETF (TSX.ESGE): This ETF has a rather high fee to participate with, but offers a similar risk and return to MSCI’s Emerging Markets Index (TSX.XEM), while achieving a more sustainable outcome.

Desjardins RI Emerging Markets Multifactor – Low CO2 ETF (TSX.DRFG): Also relatively high fee and does possess some rather non-ESG holdings such as Russia’s state-owned energy giant Gazprom (OTCQX: GZPFY).

Morningstar, Inc. (NASDAQ: MORN): Strictly US-based Funds, this one is more niche, but has a fair bit to offer.

Is sustainability something you incorporate into your portfolio, or is it something you have been considering? Let us know your thoughts in the comments below.